The Maldives faces a tricky balancing act between China and India

Geopolitically, the Maldives doesn’t look like much — over 1,000 tiny islands scattered across the Indian Ocean, associated more with holidays than power plays. The U.S. didn’t even bother sending an ambassador until just last month.

But now it’s in the thick of it, with India (its traditional ally) and China both vying to bring the country into their sphere of influence. A runoff election last week saw the victory of Mohamed Muizzu, whose campaign is perceived by the media as “pro-China” and taking advantage of popular anti-Indian sentiment. His victory “will be empowering, for Chinese investors as well as Chinese grand strategists and diplomats,” Michael Kugelman, the South Asia director at the Wilson Center, told Al Jazeera.

Over the past decade, Chinese diplomats have been increasingly active in this strategically important archipelago. The Maldives has jurisdiction over a swathe of the Indian Ocean roughly the size of Texas, a key shipping lane feeding China’s import-reliant and export-heavy economy.

There was little genuine interest between the two nations for decades. India has traditionally held influence over the Maldives, sending troops in 1988 to restore order after an attempted coup, and today playing a crucial role in bolstering the Maldives’ defense and national security. Even in the late 2000s, as neighboring Sri Lanka increasingly turned to China, the Maldives stuck with India. It meant former president Mohamed Nasheed could ignore Chinese pressure to get behind their climate plans at a UN summit in 2009, leaving then premier Wēn Jiābǎo 温家宝 “almost shaking with anger during their meeting,” according to Andrew Small, a senior fellow at the German Marshall Fund of the United States.

But China expanded its presence on the ground, setting up its first embassy in 2011 as part of a broader policy to expand its operations and sphere of influence in the Indian Ocean.

Republic of Maldives

Founded: July 26, 1965
Population: 520,000
Government: Constitutional Democracy
Capital: Malé
Largest City: Malé
Established relations with the P.R.C.: October 14, 1972

The boom years started in 2013 with the election of President Abdullah Yameen, now in prison on charges of corruption. His increasing alignment with China made sense: The Maldives had lost its developing nation status the year before, meaning it couldn’t rely on international aid for its development plans.

For Yameen, China was now one of the Maldives’ “closest friends, most trusted allies, and the most dependable development partners,” as he told President Xí Jìnpíng 习近平 when the latter paid a visit in 2014 (the first ever by a Chinese president). Data from the IMF also shows bilateral trade increased by 83% during Yameen’s six-year tenure.

China helpfully turned a blind eye to Yameen’s authoritarian streak. In 2018, Yameen arrested members of the Supreme Court of the Maldives over a ruling he didn’t like. India issued a statement of concern, and in response China supported Yameen, with a Foreign Ministry spokesperson telling the world to respect “the sovereignty of the Maldives, instead of further complicating the situation.” The Global Times was more explicit, blaming the constitutional crisis on India’s “interference” and criticizing India for its supposed hegemonic thinking.

China lent a hand with Yameen’s bold plan to concentrate the population on the islands of Malé and Hulhumale. Chinese loans bankrolled an extension of the Maldives’s electricity grid, construction of thousands of new apartments, expansion of the Maldives’ international airport, and a one-kilometer-long bridge connecting the two islands (half of its $200 million costs paid for by the Chinese as a grant, an unusually lavish gesture). Military ties were also in the cards, and in 2017 Malé gave permission for three Chinese warships to dock in the capital.

Chinese banks and businesses were throwing around big money, allowing local politicians to skim off the top. The Financial Times recorded the case of Ahmed Siyam Mohamed, a local business tycoon and head of a political party in Yameen’s ruling coalition. The Maldivian government pledged a sovereign guarantee for $127 million in Chinese loans for Siyam’s construction company to jointly build the Maldives’ biggest holiday resort, alongside a Chinese company.

These and other loans were only publicly disclosed by the succeeding government under President Ibrahim Mohamed Solih, which estimated it owed China $1 billion — half of the nation’s external debt. “The treasury has endured a colossal blow,” Solih said in his 2018 Inaugural Address, claiming the projects had been launched “for political gain.”

Business was not the same under Solih: Whereas China made up the bulk of inbound tourists (the Maldives’ main source of income) during the Yameen years, the levels have never recovered after Solih’s election.

Cooperation continued under Solih nonetheless, with China still a significant source of funding for development. But the cooperation operates mostly on a smaller scale: visa exemption agreements, $63 million in grant aid, and building processing plants to turn seawater into drinking water.

The Solih administration sought to restrain the fervor of the Yameen years. It refused to ratify a free-trade agreement (FTA) rushed through the Maldivian parliament by Yameen. Plans for a joint ocean observation station, which would have been perched along an important international shipping route close to India’s maritime border (Chinese government sources claiming it was for meteorological observation), were also scrapped.

Local scholar Mimrah Abdul Ghafoor notes how China’s ambassador regularly pushes for the unratified FTA and extols its benefits to the Maldives, despite the miniscule contribution Maldivian exports would make to China’s economy, and that 99% of China-Maldivian trade is already based around Chinese imports. But the commercial influence would be worth it for China, which has pushed for stronger commercial ties in other countries it deems strategically important, like Guatemala, and has a history of using such ties as a form of coercion, like in the Philippines.

Although Muizzu was a member of Yameen’s government, his administration may not necessarily be a return to the Yameen years. With Maldivian debt at unsustainably high levels, small-scale Chinese projects are likely the new norm on the islands. Solih’s pro-Indian political party also still has a super-majority in the legislature, a probable check on moves that might radically shift the country from India toward China.

Former President Mohamed Nasheed, who heads a political party that may join in a coalition with Muizzu, said he believed the Maldives’ reliance on Indian defense would continue. “I’m most sensitive of our security and safety, and we know that terrorist organizations can come from anywhere,” he told The Hindu. “There’s nothing better than having closer defense cooperation with India.”